Provincial pot: Should all B.C. cities get the same piece of the tax revenue pie?

In this third and final part of Black Press Media’s special series on cannabis agriculture, reporter Nick Laba explores the debate as to whether B.C. municipalities with less cannabis economy should get the same share of tax revenues as those with more, with a look ahead to the industry’s uncertain future.

If one thing is clear in the haze left by businesses scrambling to join the green rush this past year, it’s the wide range of attitudes municipalities have toward the growing industry.

An “Agricultural Study Tour” is the first item on the program at this year’s Union of B.C. Municipalities convention in Vancouver.

Its description includes challenges posed by increased development and land prices in the Fraser Valley, but notably omits a controversial crop that’s sure to dominate discussions at the five-day summit in September: cannabis.

Regardless of their individual pot policies, local governments are eager to receive a share of the excise tax on cannabis products. However, the province still hasn’t announced how it plans to dole out these revenues, and not everyone agrees on what amounts to a fair share.

On Vancouver Island, the District of North Cowichan had zoning bylaws in place on day one of legalization, and it allowed producers like Broken Coast to be a first-mover in the cultivation market.

Mayor Al Sebring said the decision to act quickly was two-fold.

“The primary driver was the economic development side — the notion that the community could benefit from this in terms of employment and things,” he said. “Another side to it is if we don’t move on this, it’s going to happen anyway.”

Sebring said that because of the pre-existing culture of growing pot, they didn’t want a situation where a bunch of grows were continuing to operate illegally under the legal regime.

Broken Coast was acquired by Aphria Inc. in January for $230 million. The producer, which names its strains after B.C.’s Gulf Islands, employs around 100 staff and has expansion plans that could add another 200 jobs.

In contrast, the City of Richmond back on the mainland has yet to approve any cannabis facilities — production, processing or retail — within its city limits. A single cultivator, Emerald Therapeutics, won a legal challenge from the city to operate on agricultural land last fall.

Other municipalities can’t even agree if they’re supporting the industry or not.

Just a stone’s throw from downtown Squamish, along the Sea to Sky corridor, growers with personal cultivation licences are continuing to operate among the stumpy buildings of its industrial park.

Several of them say they want to apply to become licensed producers, but zoning restrictions prevent them from upgrading their existing grows or finding sites to build new ones.

At Pacific Northwest Garden Supply, the store equipping most of Squamish’s growers, co-owner Chris Leboulch said he’s approached a city staffer several times looking for a suitable lot to purchase.

“She’s like, ‘Oh, there’s lots of places.’ I’m like, ‘Well, tell me where they are,’” Leboulch said. “I’ve been looking for eight months, and nothing — zero, zip. If I had a spot, I would sign up right now.”

The City of Squamish disagrees its zoning requirements prevent new licensed cultivation sites, and said it hasn’t received any requests to rezone.

“The current change in zoning has taken a proactive, yet cautious approach to the evolving cannabis production industry, but it has also left the door open for variances to be considered as applications come forward,” city staff said in an email statement.

Fair share of the pot pie

Civic leaders across B.C. have expressed frustration with the province for being slow to announce its scheme to share the cannabis excise tax with municipalities, which are responsible for much of the related policy and enforcement.

Of the 10-per-cent tax, the federal government takes 2.5 per cent. The remainder goes to the province, with the understanding that a portion will go to local government. In a statement last July, the Union of B.C. Municipalities proposed they should get almost half of the projected $125 million over the first two years.

People in the industry say municipalities that prohibit the industry shouldn’t get a piece of the pie, and Sebring agrees.

“To me, that makes total sense because the reality is that when you have these kinds of operations, be they dispensaries or agricultural operations, there are potentially some security concerns and increased RCMP costs,” the North Cowichan mayor said. “If you don’t have them and you’re not bearing those costs, why would you grab a share of that revenue?”

Municipalities like Richmond counter by saying all civic governments should receive a significant share of the revenue to offset extras costs for policing, bylaw enforcement, training, community education and outreach.

In the Township of Langley, where production giant Zenabis received a licence for its two-million-sq.-ft. greenhouse complex in August, Coun. Nathan Pachal said the simplest solution is per-capita.

“If you try to get more complicated than that, I think things get really messy, really quick,” he said.

‘Overtaken by the East’

As the legal market rounds out its first year, much uncertainty remains for the future of the plant with such deep roots running through the province.

With the global trend of liberalizing weed laws, will B.C. bud continue to make a stamp on the world stage, or will the name be preserved only in marketing clichés?

B.C. could lose out to more progressive provinces, according to Pasha Brands government relations director Susan Chapelle, whose Vancouver-based company works with prohibition-era growers and lobbies for the craft industry.

“New Brunswick has opened up cannabis. There’s 500 jobs in their industrial park outside of St. Andrews, with tilapia farming and aquaponics,” she said. “[Their mayor] opened the world cannabis conference with, ‘We’re celebrating this economy.’ British Columbia built this economy and now we’re being overtaken by the East.”

Susan Chapelle owns an integrated health clinic in Squamish. During her time as a city councillor, she helped to implement progressive zoning bylaws. (Nick Laba/Black Press Media)

Chapelle said the cannabis economy adds high-paying tech jobs and offers an alternative to today’s housing-dependent rural economies, which would collapse if development slows.

Tantalus Labs CEO Dan Sutton — who said his Maple Ridge facility started getting pushback only after residents found out it was going to grow cannabis — predicts public perceptions will soften as the industry develops.

“I think that we will have hundreds of outdoor cannabis farms in British Columbia, actually in production, let’s say over the next five years,” he said. “In that timeline, it’s also entirely reasonable that we will see farm gate sales. This is something that was promised by the [BC] NDP.”

Farm gate sales, similar to tasting rooms at wineries, allow customers to drive up and talk to the people who make a product. Sutton said this will help ease the stigma as well.

There are already dozens of websites for cannabis tourism companies waiting for laws to allow them to take members of the public to visit cultivation sites.

But with such a high value crop moving into mainstream agriculture, there are bound to be consequences.

Canada has enough arable land that food security won’t be an issue, said Martin Collins, policy and planning director for the Agricultural Land Commission. What it likely will do, is increase the price of farmland.

“You don’t pay $150,000 an acre for farmland to put your cow out there,” he said. “Farmland values are negatively affected, in terms of value, by the highest-value ag crop, and the trouble with cannabis is it’s so valuable. It’s going to distort land values for agriculture.”

As its first year goes up in a puff of smoke, the first chapter in the book of legal bud has barely been written. Many more stories are still to come.